Tuesday, November 29, 2011

What's In A Name?

Back to the Great "D" word question, but briefly, I promise. Even though, really, you should get used to it, you are going to soon be hearing it a lot, not from me but from those blow-dried, air-head corporate flacks on television; the ones you continue to trust and rely on for most of your information, whether you admit it or not.

Many analysts today say that the key economic numbers do not indicate a full-fledged depression is underway. They make a point, but it should be qualified. Here are the stats, and the qualification.

Within one year after the 1929 crash, economic output shrank by 25%. In a little more than a year, unemployment climbed to slightly more than 20%, and stayed there until the New Deal kicked in. In the current collapse, output only shrank by some 4.9%, while unemployment (if the discouraged and no longer seeking work are counted, as they were in the depression) has topped-off at 16-17%.

What should leap off the page at us here is how much greater the unemployment factor is as a function of overall production shrinkage than it was in the past. The obvious implications are that with advances in technology and production techniques, overall economic output requires fewer workers than ever before. And, should we get to the point where we see anything like a 25% productive downturn again, as a result of ever sagging demand, unemployment could go to 60-70%. That is simple math.

We need a shorter work week, more people employed, and much higher wages. And we need to demand and start building those things in right now, or we are liable to see suffering like never before. Besides, why shouldn't working people share in the benefits of greater production with less labor demand, instead of having all the abundance creamed off by the greedy in the top 1%?